How will Microsoft respond to Apple/IBM partnership?

IBM’s
partnership with Apple, which will see IBM develop integrated industry-specific applications
for iOS, changes the game for enterprise mobility. The proverbial elephant is back in the room and
now Microsoft needs to react.

Apple’s iOS is losing market share to Android, and as
Computer Weekly has previously reported, the high-end tablet and smartphone markets have reached saturation.
The partnership with IBM – which has acquired FiberLink mobile device management and SoftLayer
cloud management and introduced the BlueMix developer cloud – gives Apple
a way into enterprise IT.

“This partnership could mean trouble for Microsoft with its
Azure and Nokia strategy,” said Mark Skilton, a professor at Warwick Business School. “While
attempting to play in both mobile and cloud camps, Microsoft may not be able to be master of both
in consumer and enterprise markets. Amazon has recently attempted to launch its own mobile device
as well as reader devices but, as with the failed Facebook mobile, the issue for these companies is
in being able to create quality services and content for the enterprise and consumer
markets.”

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So far Microsoft’s CEO has set out his plans for a new
Microsoft based around the idea that no other enterprise IT company is wholly focused on devices and cloud computing. Microsoft clearly needs to respond to IBM.

During the company’s worldwide partner conference (WPC
2014), Nadella presented his vision for the company’s cloud strategy. Microsoft is also looking at
how to integrate Nokia into the Microsoft product family.

Cloud is the future

Having previously spoken about Microsoft moving away from
being a devices and services company, Nadella used the WPC to outline what the company will be
doing with cloud computing.

During his WPC keynote he said: “We have an amazing
opportunity ahead here. We’re the only company that’s going to build that enterprise-grade
infrastructure that meets the realities of the geopolitics of the world, the regulatory regimes of
the world, and yet give them the hyper-scale economics. So that means we are the company that can
provide the datacentre backplane for all computing needs of a complex enterprise – private
cloud, public cloud and hybrid cloud.”

This ties in with a major restructuring effort that will result in 18,000 job losses over the next 12 months. Nadella
wants to modernise Microsoft’s engineering processes and reduce the number of layers of
management.

He told delegates: “We’re here because we were successful not
only in being able to imagine the turn, the next platform, but also because we changed. We changed
the core of who we are in terms of our organisation and how we work, and our value to our
customers. That’s the hardest part, really. We need to move forward with the boldness that we can
change our culture. It’s not even this one-time change, it’s this process of continuous renewal
that we have to have that commitment to succeed – succeed with a customer.”

Nadella also talked about the concept of an
infrastructure backplane – “one of the biggest benefits that this ecosystem can drive in the
marketplace”.

In the 1990s, Microsoft grew a Windows ecosystem based
on a common software programming model that enabled third-party developers, PC makers and service
providers to create their own products on top of the Windows OS.

Next desktop Windows

Today, Azure is the basis of the new Microsoft ecosystem for
server-side computing, spanning on-premise and private and public cloud deployments. Desktop
Windows is less relevant to the heterogeneity strategy, although Microsoft is committed to
developing the desktop OS.

With major hardware partners like Dell, HP, Acer and Lenovo
selling Android tablets alongside Windows tablets, notebooks and hybrid devices, Microsoft appears
to be acknowledging that the Windows OS is not going to be the big moneymaker of the
past.

Nadella said: “We’re also going to have the most comprehensive
end-user infrastructure. So this is spanning device management, identity management and data
security. I can’t be more excited about Enterprise Mobility Suite. It’s a fantastic piece of
technology. It’s the place where we will shine because of the complexity that exists in
IT.”

The numbers could stack up. If every corporate device needs to
be authenticated on a device-independent, cloud-based Microsoft Active Directory, each one will
need a client access licence (CAL).

Clive Howard, principal analyst at Creative
Intellect Consulting, said: “There is a certain
thinking at MS HQ in Redmond, where they see the cloud as the platform rather than Windows. The OS
is a UI [user interface] to access other services. The nuts and bolts of Office 365 shows what
Microsoft is thinking about.”

Potentially, Active Directory and Office 365 could become the
proprietary technology lock-ins that Windows and Office used to be.

Forrester analyst Ted Schadler recently noted: “Satya Nadella
is making big moves to refocus Microsoft on the two things it has always done best: software
platforms for building and hosting custom applications, and a productivity toolkit and platform
that a billion people use to get work done around the world. Nadella’s recent announcements around
staff and product focus on platforms and productivity show that he’s willing to take risks and
abandon businesses in order to accomplish the broader goal.”

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